Digital Payments: Best Practices for Dentists

July 10, 2025

Moving money efficiently and securely at your dental practice is critical. Unfortunately, it does not always happen that way.

From reimbursing team members to paying smaller vendors and contractors, digital transfers between business and personal accounts are now very common, but they come with tax and security implications.

Why It Matters

If a transfer is misclassified or poorly documented, it could:

• Trigger unwanted taxable income.
  
  
• Obscure your expense reporting.
  
  
• Disrupt your books.
  
  
• Even get flagged during an IRS audit.
  
  

In this article, we’ll break down:

• Common digital security pitfalls.
  
  
• Tax-smart documentation practices.
  
  
• A platform-by-platform comparison.
  
  
• Strategic tips tailored for dental teams.
  
  

Security Pitfalls to Avoid

Modern digital payment tools offer speed and convenience but introduce cybersecurity and operational risk if used carelessly. Here's how to protect yourself:

Fraudsters are increasingly sophisticated, using fake emails, texts, or invoices to impersonate staff, labs, or vendors.

Dental Scenario: You receive a message that looks like it’s from your implant vendor, requesting an account change. You make the transfer only to discover it was a scam.

Best Practice: Confirm bank or payment changes by phone. Make it a policy: no email-only confirmations for new wiring instructions.

2. Weak Authentication

Platforms that don’t require strong passwords or 2FA are vulnerable. Once compromised, hackers can reroute funds or access sensitive data.

Best Practice: Use unique passwords (via a password manager) and always enable 2FA even for personal tools like Venmo or PayPal.

3. Public Wi-Fi Transfers

Working remotely or between patients? Transferring funds over a café or hotel Wi-Fi exposes your data to prying eyes.

Best Practice: Use private, secured connections. If you’re mobile, consider using a VPN to protect data in transit.

4. Poor Access Controls

When multiple people log in using the same account, there’s no record of who authorized what.

Dental Scenario: Your office manager pays a vendor, but later, you question the timing. There's no audit trail.

Best Practice: Create individual logins with roles that match responsibilities. Most platforms allow view-only or limited-access roles for admins or bookkeepers.

5. Outdated Software or Apps

Older versions of payment apps or browsers may lack critical security patches.

Best Practice: Keep browsers, apps, and devices updated regularly. Enable automatic updates where possible.

Documentation Tips

One of the most overlooked aspects of digital transfers is memo and description consistency. These fields help identify a transaction's intent, and without them, your CPA may not know how to classify it.

Risks of Poor Documentation

• Unintended Taxable Income: Transferring money to your personal account without a note could be interpreted as income, not a reimbursement
  
  
• Disallowed Deductions: If an expense lacks a clear business purpose, auditors may reclassify or disallow it, even if it was legitimate.
  
  

Best Practices for Memo Use

• Be Specific: Use language like:
  
  
  • “Staff Bonus Q2.”
     
  • “Owner Distribution – April.”
    
    
  • “Doctor Lab Reimbursement.”
    
    
• Log Transfers Separately: This is especially important when using tools like Zelle or Venmo, where the memo may not transfer into QuickBooks.
  
  
• Reconcile Often: Monthly check-ins with your bookkeeper or CPA reduce classification errors.
  
  
• Use Accounting Tags: If using QuickBooks Online (QBO), apply classes, tags, or projects to group expenses correctly.
  
  

Who Controls What Gets Imported Into QuickBooks?

Many assume that once a memo is typed into a payment, it flows cleanly into their accounting system. That’s not always true. Whether your memo is retained and readable depends on the payment platform, your bank, and how you’ve synced with QBO.

Memo Field Behavior by Platform

Key Takeaway: Most banks don’t control memo visibility, platforms do. Choose tools built for business, not casual peer payments, especially when audit trails matter.

Platform Fit for Dental Practices

Let’s compare each platform through a practice management lens: security, visibility, and how well they integrate into your accounting system.

Platform Ratings for Dental Practice Use

Smart Transfer Habits for Dental Teams

Use the Right Tool for the Job

Don’t use Venmo for lab payments or Zelle for rent splits. Use QBO Payments or Bill.com for traceable, accountable payments.

Always Label Everything

Even if the tool doesn’t carry the memo, you should have an internal record (spreadsheet, accounting note, file attachment) that clarifies every transfer’s purpose.

Involve Your CPA Early

Add your CPA as a user in QBO, Bill.com, or PayPal Business. This gives them real-time access and reduces end-of-year chaos.

Review Your Payment History

Pick a window (past 6 or 12 months) and look at:

• Who sent funds?
  
  
• What platform was used?
  
  
• Was the transfer documented correctly?
  
  

Avoid Mixing Business and Personal Funds

This is especially critical for S-Corp owners. A lack of documentation here can trigger IRS scrutiny. Clearly label each transfer with context, e.g., “Owner Draw,” “Loan Repayment,” etc.

Digital payments make running a dental practice more efficient, but they also create risks if not handled carefully. With a few thoughtful systems and the right tools, your financial transactions can be secure, tax-smart, and easy for your advisory team to work with.

Not sure where to start? Contact us today!